At 08.34 hours on 14 Jan 1942 the unescorted Norness was hit in the stern by one of two stern torpedoes from U-123 about 60 miles from Montauk Point, Long Island and began listing to starboard. At 08.53 hours, a G7e was fired from a stern tube as coup de grâce, hit the tanker underneath the bridge and the ship began settling on even keel, allowing the survivors to abandon ship in the starboard lifeboat and row away from the ship. The port lifeboat had capsized during the launch due to the heavy list and threw the occupants into the cold sea, drowning two Norwegian crew members. At 09.29 hours, the vessel was hit by a third torpedo in the engine room, after a second coup de grâce had malfunctioned at 09.10 hours. Four minutes later the tanker sank by the stern in shallow waters, the bow remaining visible over the surface.

30 survivors were spotted in the afternoon by a blimp of the US Navy, which directed USS Ellyson (DD 454) and USCGC Argo (WPC 100) to them, while nine men were picked up by the American fishing boat Malvina. All survivors were landed at Newport, Rhode Island.